August was the second month of sharp falls in sales volumes and with a similar drop expected in September, business confidence is weak.
Growth in average selling prices has eased back from a 16 year high, but remains strong.
60 per cent of respondents to the latest CBI Distributive Trades Survey said that sales in the first half of August were lower than a year ago, while only 13 per cent said they were up.
The three-month moving average of sales volumes, which smoothes out monthly instability, continued to decline and a drop of 30 per cent was a survey low.
The weak sales have filtered through to the volume of orders placed with suppliers, and a balance of 56 per cent reported a fall in orders that was worse than expected.
Labour market conditions have weakened and a net 31 per cent of retailers reported their headcount is lower than last year. This trend in employment is expected to continue into September.
Andy Clarke, chairman of the CBI Distributive Trades Panel and retail director of Asda, said: "This has been a summer that many retailers would rather forget. The downturn in the housing market is continuing to depress sales for those shops selling big-ticket items.
"This month's report also highlights that as disposable incomes tighten, food retailers fare better than the rest of the market. Shoppers will continue to be forced to look around for the best value on offer for all their purchases - not just their groceries."
Ian McCafferty, CBI chief economic adviser, said: "Retail conditions have been extremely tough this summer, and the wet August has been a further blow. Sadly, no let up is expected as we head into early autumn. The business outlook is particularly weak and retailers are having to scale back their employment and investment plans in an attempt to ride out the storm."